The Use of Financial Experts in Divorce Mediation

For spouses whose divorce mediation includes complex financial issues, it is often helpful to include one or more outside financial experts in the mediation process. Financial experts can aide the mediation process in a variety of ways. For example, a jointly retained appraiser can help the parties determine the agreed-upon value of complex assets subject to division, ranging from real estate to small businesses to artwork.

Similarly, a Certified Divorce Financial Analysts (CDFA) can assist participants in understanding the tax implications of potential settlement proposals or help participants generate settlement proposals that balance the individual needs of each spouse based on factors such as cash flow, present and future expenses, retirement needs and future employment prospects.

One hallmark of mediation is that participants negotiate directly to reach their own settlement outcome. Unlike litigation, where the framework is dictated by judges, attorneys and the litigation process itself (i.e. discovery, mandatory hearings, etc.), mediation puts parties directly across the table from one another, often with little outside input.

But what happens during mediations that involve complex financial issues that one or both participants struggle to grasp? Even if the parties are using a financial sophisticated mediator, there are limits to how much analysis and opinion the mediator should offer, where his or her main focus is on managing the negotiation process as a third party neutral. A better option for resolving complex financial issues in divorce mediation often includes using a jointly retained financial expert to assist the parties in identifying and addressing financial concerns and/or translating the participants’ financial goals into real world transactions. The role of a joint financial expert who participates directly in mediation sessions is somewhat different from that of the mediator. Like the mediator, such financial experts are acting as an objective neutral, rather than representing a specific spouse. However, joint financial experts tend to hold an evaluative position in the mediation that contrasts in important ways with the more facilitative role of the mediator.

Put simply, a financial expert acting in an evaluative role is expected to analyze the financial records and information provided by the spouses and offer specific analysis and suggestions to participants by flagging financial concerns, suggesting specific settlement options and generating language that translates participants’ individual and shared interests into specific positions within a written agreement. The financial expert’s evaluative role often contrasts with the more facilitative role of the mediator, whose primary task is to facilitate the exchange of ideas between the parties (rather than suggesting ideas to the parties) while managing the mediation process.

Not every divorce mediation requires the involvement of a financial expert. For divorces featuring straight forward child support or alimony issues, and where the assets consist primarily of a single home and each party’s 401K account, the input of a financial expert probably isn’t necessary. However, for families with substantial or complex asset holdings, or significant compensation, a financial expert can provide a valuable role in the mediation process on behalf of spouses seeking a mutually beneficial resolution to their divorce.